The friend that I trusted has failed me
In the fight, and my hope is departed:
I speak what I know of; and note it,
Ye nobles, – I tell ye no leasing.
Lo, the raven is ready for carnage,
But rare are the friends who should succour.
Yet still let them scorn me and threaten,
I shrink not, I am not dismayed.

and

Of the reapers in harvest of Hilda
– Thou hast heard of it – four men and eight men
With the edges of Skrymir to aid me
I have urged to their flight from the battle.
Now the singer, the steward of Odin,
Hath smitten at last even Bersi
With the flame of the weapon that feedeth
The flocks of the carrion crows

and

I have smitten Toothgnasher and slain him,
And I smile at the pride of his boasting.
One more to my thirty I muster,
And, men! say ye this of the battle:
In the world not a lustier liveth
Among lords of the steed of the oar-bench;
Though by eld of my strength am I stinted
To stain the black wound-bird with blood.

The love songs are not spared:

I tell you, the goddess who glitters
With gold on the perch of the falcon,
The bride that I trusted, by beauty,
From the bield of my hand has been taken.
On the boat she makes glad in its gliding
She is gone from me, reft from me, ravished!
O shame, that we linger to save her,
Too sweet for the prey of the raven!

Nothing improves a love song like the presence of Corvidae.

Anyway, the presence of the ravens is only one instance of how hardcore the songs of the Icelandic sagas are. This led me to ask the obvious question – are there any Scandinavian metal bands which incorporate songs from the sagas into their lyrics. The natural person to ask was Rahul Raguram.

Rahul, being a cute guy, pointed me in the direction of Oakenshield and Amon Amarth. Oakenshield has in fact incorporated text from the Poetic Edda into their lyrics. At least, they claim to have done so. In their The Death of Baldr, I was hard pressed to make any lyrics out. Their name definitely takes its name from the Poetic Edda, specifically the Völuspá. And here’s a cool bit of triva – Tolkien took the name for the Dwarf Thorin Oakenshield (the one who was King Under the Mountain) from the same source. Anyhow, here’s The Death of Baldr:

After more than a year of negotiations, New York City has reached a deal to take control of Governors Island from the state, moving a prime 172-acre piece of waterfront real estate into the hands of a land-starved city and closer to an ambitious redevelopment, city and state officials announced on Sunday.

…

These agreements represent a reversal from 35 years ago, when a city on the verge of bankruptcy parted with a number of its assets and relied on the state to shore up its finances.

Raymond Horton, a professor at Columbia Business School who ran a commission that studied New York City’s finances during the fiscal crisis of the 1970s, said that by taking over properties like Governors Island, Mr. Bloomberg achieved a milestone that had eluded many of his predecessors.

“What tips the balance here is the state’s fiscal crisis,” Mr. Horton said. “The state is in a dire situation. The city is much better managed at this moment. That makes possible something that was not when the two governments’ finances were in similar condition.”

This is not something very novel though. Throughout the nineteenth century countries that were broke or defeated in war would sell their territories, or give them up against war reparations, or sign long or perpetual leases. Some notable examples are:

New York City itself! After the Dutch lost the Anglo-Dutch war, they allowed the British to keep New York in return for the island of Run in the East Indies, which at the time was the only place in the world where nutmeg used to grow. Talk about excessive discount rates.

The Guantanamo Bay Naval Base, which Cuba handed over to America as a perpetual lease back in 1903.

Hong Kong, which the Chinese empire leased to Great Britain for 99 years in 1900.

Alaska, which the Russians sold to America for 7.2 million dollars.

Almost a third of the continental United States, when the Thomas Jefferson administration paid Napoleon 15 million dollars in the Louisiana Purchase. They had offered him 10 million dollars just for New Orleans, but Napoleon had wars to fight and was desperate for cash, so he threw in pretty much the middle third of the United States. The extra 5 million dollars kept Napoleon’s armies going successfully until the Russian front in 1812, when famine decimated his army. On the other hand, Napoleon thought that by giving all that land to the US, he would make life even more difficult for Great Britain, which was hostile to America at that point of time. While Napoleon’s forces were being thulped at Moscow, America and Britain were actually fighting the War of 1812 which ended in a stalemate, so maybe this worked. Incidentally, the financing for the Louisiana Purchase was a fascinating piece of structuring.

Anyhow, it looks like the twenty-first century is going to see the return of grossly broke countries selling off their territory to keep up with the payments. The first inkling that it’s making a comeback came when two German MPs demanded that Greece sell off its islands (oh, and the Acropolis) if they wanted a bailout. It didn’t happen, but considering that Greece will probably default on its debt again soon, we may see this idea being taken up again. Portugal, Italy and Spain are also headed towards default, so we may soon witness the spectacle of Mediterranean beaches and slopes of Alpine mountains up for auction. It will be awesome.

The fiscal situation of the PIGS countries now is of course tiny compared to the fiscal situation of the United States a few years down the line. With the demographic bulge of the Baby Boom coming into Medicare and Social Security payout ages, the chances of the United States defaulting on its debt are beginning to look likely. The USA too may have to start selling its territory. Fortunately, it has a lot of empty territory to sell. Especially Michigan, which is rapidly depopulating.

The only thing is that selling something only works if there’s a buyer. That would involve either handing the territory over to whoever was holding the US debt and furious about the default, or someone with a shitload of cash.

Naturally, the prospect of China occupying Idaho or Nevada may not thrill the Americans, and they would be under pressure to sell to someone with a shitload of cash instead. Extrapolating from current trends, that would be… Apple. Steve Jobs has always been megalomaniac enough to want to own a country, but until now, it never looked like he actually would.

As a free market fundamentalist, it is embarrassing for me to admit that a regulator is doing a good job where the market has failed. However I am so pleased about how SEBI has taken on IRDA that I shall suppress my instincts and praise a regulator to the skies. Since this will mean unleashing my inner financial regulation geek, I shall do this in an easy question and answer format, so that even Nilu can understand what I am talking about.

Shortly before everyone’s attention was occupied by Shashi-Lalit-Sunanda and Sania-Shoaib, the SEBI had released an order barring insurers from issuing ULIPs. This got the insurers and the IRDA into a tizzy. Personally, I think this was awesome.

Wait, what does that even mean?

The SEBI (Security and Exchanges Board of India) is the semi-independent regulator of everything to do with financial markets in India. It sets the rules under which stock markets, commodity exchanges, and mutual funds operate. Technically, it regulates debt securities as well; but as Percy Mistry and Ajay Shah keep lamenting, India has no debt market to speak of.

A ULIP, or Unit Linked Insurance Product is a life insurance policy that doesn’t just give you life insurance cover but invests part of your premium payments into securities. It (claims to) therefore work as a savings and investment plan as well as a life insurance policy.

A ULIP is also pure evil. It is to consumer finance what the Chili’s Smokehouse Bacon Triple Cheese Big Mouth Burger with Jalapeno ranch dressing is to food. Actually, it’s worse, because the burger at least tastes decent. Compared to a normal life insurance policy, a ULIP gives you far less cover for the same premium – sometimes ten to twenty times less. As for the promise of investment, they deduct so much money for “administrative charges” that you might not even make the money you put in for six years at a time. There are other issues with ULIPs that make them terrible products, but that would make the post too long. If you’re interested, Deepak Shenoy has a post about how awful they are. Unfortunately, because the sales commissions on ULIPs are so high – that’s where the “administrative charges” go – insurance salespeople will keep trying to pitch you a ULIP unless you know what you’re looking for and actively demand traditional life insurance plans.

This year, the SEBI decided that enough was enough, and told insurance companies to stop coming up with new ULIPs unless SEBI approved them first.

It’s supposed to do that, right?

Ah, that’s the interesting bit. See, insurance companies are actually not regulated by SEBI, but by IRDA – the Insurance Regulatory and Development Authority. IRDA was very pissed off that SEBI is encroaching on its turf.

SEBI’s position was that since the investment portion of ULIP premiums is going into mutual funds run by the ULIPs, it needs to approve the mutual funds first. Specifically, it wanted to bring the administrative charges of ULIP funds into line with those that apply to regular mutual funds (it did a big overhaul of how mutual funds could deduct loads and charges last year).

So the situation was that two semi-independent regulators under the Ministry of Finance were fighting over who was in charge. Ajay Shah has a blogpost about how this is the outcome of not having overall financial regulators. I am far ruder than Ajay Shah, so I will make I-told-you-so noises about how this is what happens when the Finance Ministry doesn’t implement the Percy Mistry report – the one that, you know, it asked Percy Mistry to write.

What happened next?

There was a media circus about Sania Mirza and Shoaib Akhtar getting married.

No, no, I mean about the SEBI-IRDA smackdown.

Oh. Pranab Mukherjee told them to take it to the courts and get it sorted out over there. Professor Jayanth Varma was absolutely delighted about this, because past history shows that courts resolve disputes much faster than bureaucracy does. The BJP was much less delighted about this, and Arun Jaitley demanded to know why it was being taken to the courts and not being resolved by the Finance Minister himself. But now that they’ve got phone wiretaps to stall parliament over, we probably won’t hear anything about that again. It’s certainly disappeared from Google News search results.

Whatever happens next will happen in court now. But SEBI has a decent case.

Hee hee. You’re actually supporting a regulator.

Oddly enough, yes. Then again, I’m pretty gleeful about IRDA being pwned. So it evens out. I should also point out that IRDA represents a lot of what is wrong with regulation, both Indian and in general. It’s far more concerned about the welfare of insurance companies than insurance consumers, and about a month ago was actually running newspaper ads about the benefits of ULIPs. IRDA, not SEBI, should have cracked down on insurance companies about excessive charges and transparency.

On a less dogmatic and free market fundamentalist note, I like regulators who are heavily involved with creating the start conditions and rules of their market, and then creating a set of rules so good that the market can run by itself with minimal interference. I dislike the other extreme of regulation, where the regulator keeps getting involved with every little thing the market players do – think of a cricket match where the umpire doesn’t just call no balls and wides, but tells the bowler how to do the run up before every ball. Over the past few years, SEBI has been moving to the space where it only addresses the rules. The RBI and IRDA are still very much in the micromanaging space.

So I think this particular spat is very exciting in that it will provide an impetus to move to the regulatory model I like.

Confession: I bought a ULIP myself six years ago. In my defence, I was a filthy undergrad at the time and knew no better. I exited it this March. Fortunately stock prices are so high right now (unreasonably so, in my opinion) that I was able to get back all the money I’d put in and then some. My mum had also bought a ULIP a couple of years after me, and that still hadn’t broken even the last time we’d checked.

Perfidious Albion’s treachery was not to go unpunished for long! Six months later, Eyjafjallajokull erupted; and shut down European airspace. In what seems like divine justice, the United Kingdom was worst affected. British airports opened after six days of being shut down, well after continental Europe and Ireland.

The Saga of Cormac the Skald, for instance, has this description of what Cormac did when someone showed insufficient politeness when offering him a black pudding:

Now, in the autumn, Narfi’s work it was to slaughter the sheep. Once, when Cormac came to Tunga, he saw Steingerd in the kitchen. Narfi stood by the kettle, and when they had finished the boiling, he took up a black-pudding and thrust it under Cormac’s nose, crying:

“Cormac, how would ye relish one?
Kettle-worms I call them.”

…

And in the evening when Cormac made ready to go home he saw Narfi, and bethought him of those churlish words. “I think, Narfi,” said he, “I am more like to knock thee down, than thou to rule my coming and going.” And with that struck him an axe- hammer-blow…

That’s right, he hit Narfi with an axe-hammer-blow for dissing a sausage. When vengeance is involved, things get even worse, as we see in Egil’s Saga:

Kveldulf had in his hand a battle-axe; but when he got on board, he bade his men go along the outer way by the gunwale and cut the tent from its forks, while he himself rushed aft to the stern-castle. And it is said that he then had a fit of shape-strength, as had also several of his comrades. They slew all that came in their way, the same did Skallagrim where he boarded the ship; nor did father and son stay hands till the ship was cleared. When Kveldulf came aft to the stern-castle, he brandished high his battle-axe, and smote Hallvard right through helm and head, so that the axe sank in even to the shaft; then he snatched it back towards him so forcibly that he whirled Hallvard aloft, and slung him overboard. Skallagrim cleared the forecastle, slaying Sigtrygg. Many men plunged into the sea; but Skallagrim’s men took one of the boats, and rowed after and slew all that were swimming.

They didn’t kill everyone. They kept a couple of people alive to go back to the king with this song:

‘For a noble warrior slain
Vengeance now on king is ta’en:
Wolf and eagle tread as prey
Princes born to sovereign sway.
Hallvard’s body cloven through
Headlong in the billows flew;
Wounds of wight once swift to fare
Swooping vulture’s beak doth tear.’

With heritage like this, volcanic eruptions are only the beginning. When the British treated the Icelanders like terrorists, perhaps they did not realise that this could become a self-fulfilling epithet. With their economy in shambles, the Icelanders may now turn to the way of their forefathers and return to setting out in longboats and go a-viking on the British coast. Taking the names of Thor and Tyr, their depredations shall make Brown and Darling pay. Lindisfarne!

This is interesting. Back in the 19th century, when Southern Pacific and Central Pacific were building transcontinental railroads in the USA, they used Chinese labourers when they hit California. Here’s a very Web 1.0 page on the subject. Precis-ing it madly, the interesting bits are:

When Charles Crocker of the Central Pacific was asked how small and weak Chinamen would be up to the heavy physical labour of building railroads, he said “They built the Great Wall, didn’t they?”

Irish labourers were paid thirty dollars a month each and given free accommodation. The Chinese got a dollar extra but no acco.

The railroad companies were excited about using Chinese labour because they did not practice slavery or peonage, but had a labour agency system. The Age of Gold, a book I read a few years ago, mentioned that the railroad owners were largely northerners and antislavery; and also that the question of granting statehood to California helped trigger the US Civil War.

That New York Times article in the link has a full circle narrative, and saying that China is now bringing technology and money instead of labour; but given the way the Chinese operate, they’ll probably bring in the labour as well. (Alas, no citations to offer here except private emails about what’s going on at Mundra port and my own observation about the Huawei office in Mumbai)

The really interesting part is on Page 2 of the article:

China’s mostly state-controlled banks had few losses during the global financial crisis and are awash with cash now because of tight regulation and a fast-growing economy. The Chinese government is also becoming disenchanted with bonds and looking to diversify its $2.4 trillion in foreign reserves by investing in areas like natural resources and overseas rail projects.

“They’ve got a lot of capital, and they’re willing to provide a lot of capital” for a California high-speed rail system, Mr. Crane said.

I have a conspiracy theory that infrastructure is only the beginning, but more on that in a separate post.

This blog is back up (please say you noticed it was down), and much writing will follow. But first, an important pending task: here is the link to the NED Open Quiz 2010. It contains all the audio, all the video, and all the answers. This makes it a massive download, but based on the feedback, I think you’ll find it’s worth it.